If you’re a dedicated market geek with plenty of time on your hands, you can uncover some really interesting things about stock market history and—perhaps—learn some interesting lessons from them. Thus Michael Batnick, of Ritholtz Wealth Management in New York, took a deep dive into the numbers, and these are some of the things that he found.
Since 1916, the Dow Jones Industrial Average reached new all-time highs on fewer than 5% of all market days. Think about that: during a time period when the index has delivered 25,568% positive returns, investors have been under-water 95% of the time. Since 1970, the Dow has grown at less than .03% a day—but through the powerful magic of compounding, that has resulted in a 3,000% total gain.
If you’re the sort of person who might be inclined to bail out during a market decline, then Batnick points out that 20.6% of the time—while these incredible long-term returns were being generated—the Dow was down 40% or more from its highs. His comment: “no pain, no gain.”
One time period when you might have been inclined to bail out was during the 1970s. Over that entire decade, from January 1, 1970 to December 31, 1979, the Dow gained just 38 points. (It’s over 25,800 today.)...